By Danny Schechter
On the Monday after Nelson Mandela’s death, The New York Times’ specialist on deals, Andrew Ross Sorkin, dealt the truth a few blows by offering an incomplete and superficial story about Mandela’s infatuation with the “freedom of markets” and, by extension, in Timesspeak, a “Free Economy.”
Rather than frame the story as a case of how the power of global corporations and banks threatened and pressured the new Mandela government—even before it became a government—to embrace their notions of neo-liberalism, to ensure that those who wielded economic power in the past would continue to do so in the future, the paper of record built its story of an event that is on the record: Mandela’s “seeing the light” at a meeting of the World Economic Forum.
That was the tip of an iceberg.
Sorkin reports (or should I say distorts?) the event this way:
The story of Mr. Mandela’s evolving economic view is eye-opening: It happened in January 1992 during a trip to Davos, Switzerland, for the annual meeting of the World Economic Forum. Mr. Mandela was persuaded to support an economic framework for South Africa based on capitalism and globalization after a series of conversations with other world leaders.
“They changed my views altogether,” Mr. Mandela told Anthony Sampson, his friend and the author of “Mandela: The Authorized Biography.” “I came home to say: ‘Chaps, we have to choose. We either keep nationalization and get no investment, or we modify our own attitude and get investment.’ ”
Think of that: He is saying, “we have to choose.” “Have to” implies Mandela perceived he had no choice. That’s not evolution, it’s extortion. Sorkin asks whether they were pressured, but his probe goes no further than talking with one man who supported the change, Tito Mbweni, a onetime labor leader who later became a functionary at the Reserve Bank, playing the role of business’ best friend in South Africa.
(I met Mbweni back then at the Labor Department in Washington, where he was being groomed for leadership like many South African economists and activists in the African National Congress who were given special courses in economics by Western governments, educational institutions and corporate consultants.)
The Times reports correctly that the ANC was advised by officials from socialist governments in Vietnam and China, who were then “modernizing” their economies (i.e., taking the capitalist road) not to antagonize the West.
One point to remember, biographer Sampson also wrote: “Mandela had no experience in economics, but he accepted the imperatives of the global marketplace.” In furtherance of this market logic, under pressure to please South African mine owners and bankers, he appointed Derek Keys, de Klerk’s pro-market finance minister as his own, and then, when he stepped down, replaced him with Chris Liebenberg, a banker. He kept Chris Stals, a conservative former member of the Broederbond, on the Reserve Bank. In essence, he said, “the old guard was running what to all the world looked like a new show.”
Ronnie Kasrils, the MK commander turned government minister, looked back on this history and wondered whether compromises made then sealed the country’s fate, in effect blocking deeper social change. This tension also divided many in the ANC even as it seems to have satisfied the small group of billionaires that dominate the economy.
Behind all of this was Mandela’s hope or belief that if South Africa pleased the West, manna would fall from heaven and wealthy Western governments would follow through on implied and in many cases actual promises to generate new jobs and make substantial investments.
For the most part, that didn’t happen, and, as the Times reports, the new post-Davos ANC policy shift from a Reconstruction and Development Programme to GEAR, a finance strategy approach favored by banks and corporations, failed.
Poverty and unemployment remain obscenely high in today’s South Africa. International businesses did not live up to their pledges, as they rarely do.
In my book, “Madiba A to Z: The Many Faces of Nelson Mandela,” I go back to less publicized earlier encounters between the ANC and the global economy, back to 1993 when top secret negotiations took place in nighttime sessions of the then-in-charge Transitional Economic Council, made up of equal numbers of members from the old government and the expected new one to come after the elections, just six months away.
It was there that the ANC discovered that South Africa was largely broke, bankrupted by excessive military spending and corruption by the Afrikaner government—there was little money in the till after big banks and others were given major so-called life boats, loans to tide them over in the transition.
According to Sampie Terreblanche, an economist at Stellenbosch University in South Africa and a former economic adviser to the apartheid government, the International Monetary Fund agreed to make a loan, but with severe conditions that both the ANC and members of the whites only National Party had to agree to unanimously.
He tells the whole story in his book, “Lost in Transformation” and he told me: “When they reached agreement, more or less, they decided that South Africa needed a loan of $850 million to solve some of our foreign exchange problems. The International Monetary Fund was prepared to give us the money on one condition: that all 16 members—half representing the ANC, half representing the government—had to sign a document. If one reads that document carefully, one sees that it is nothing but the Washington Consensus. South Africa had to commit itself to fiscal austerity, to liberalization, to privatization, to all these things. So some people called it a sellout.”
“A sellout? That sounds very strong,” I said.
“Call it a sellout, an elite compromise, or the elite conspiracy, call it what you like, it happened six months before the general election of 1994,” Terreblanche explained. “In sum, the economic philosophy that was favored by the U.S. in Washington, in London, at the big banks, and the values behind it, were imposed on the negotiating parties. They said, ‘We’ll give you the money but you have to agree to our terms.’ ” So in short, what was lost was the transformation itself.
Also unreported by the Times was how several all-white Afrikaner dominated regimes had earlier nationalized key sectors of the economy without the hostile reaction Mandela received when he announced he would uphold the pledge of the 1955 Freedom Charter to create a fairer economy.
When he was released from prison, Mandela told the South Africa Now TV series that his plans for nationalization were very few, limited mostly to the mines. He said he supported a market model for all other industries.
That was in February 1990, just a few days after Mandela’s release from prison, so he never envisioned total nationalization of the kind his adversaries suggested, and The New York Times implied.
He was always more pragmatic than ideological, and, in fact, it was the communists with whom the ANC had an alliance that proposed many compromises to reassure the Afrikaners they could keep their jobs.
University of Kwa-Zulu-Natal professor Patrick Bond was working on the Reconstruction and Development Programme when it was abruptly canceled with no discussion or debate. He writes in his book, “Elite Transition,” that the ANC’s hopes for “better life for all,” its 1994 election slogan, were torpedoed by outside and insider pressure.
He wrote, “such hopes—and extensive ‘scenario planning’ efforts to draw ANC and some trade union leaders up the oft-cited ‘learning curve’ (which quickly turned out instead to be a steep forgetting curve for former shop floor or street-smart activists)—were soon to be richly rewarded. . . . Indeed, not only were free enterprise and property rights enshrined in every major economic policy statement and the Constitution itself, full-blown neo-liberal compradorism became the dominant (if not universal) phenomenon within the ANC policy-making elite.”
Jay Naidoo, the former minister who ran the first economic reform, the RDP, told me that the macroeconomic program known as GEAR (Growth, Employment and Redistribution) was imposed abruptly. “That document was drafted in secret,” he recalled. “Not even the ANC office bearer saw it. Not even the national executive committee of the ANC saw it. We saw it on the day it was published. So there was a conspiracy in our own ranks which obviously had interacted with very powerful economic forces in the country, and felt that the RDP was too radical.”
The New York Times was not interested in examining how economic pressure of this kind operates in the real world, and is actually leveraged through lobbying, media editorializing and co-optation bordering on blatant corruption. (When officials are caught taking money, they take the fall, rarely the people who do the bribing.)
The ANC is up for re-election next year and it is being challenged by a red-beret-wearing group called the Economic Freedom Fighters. There is no question that these issues will be debated intensely, way beyond the antiseptic reporting by the Times.
There are many in the ANC who are not proud of how their lack of economic sophistication allowed them to be played by their friends. Even Thabo Mbeki, Mandela’s successor who was once partial to neo-liberalism, is now saying that a country can’t allow market needs to dominate economic policy.
He told me in “Madiba A to Z”: “I think that the fundamental problems of South Africa have remained unchanged since that transition in 1994. The fundamental problems of poverty, of inequality. And therefore national reconciliation, national cohesion and all that, you have to address these fundamental questions. What is it that needs to be done in order to eradicate poverty? What is it that needs to be done to bridge these enormous gaps in terms of wealth, of income, of opportunity, and so on, between black and white, men and women, and all that?
“One of the problems, one of the challenges that we have never been able to solve in all of these years since our liberation, is the attitude of white capital. Even today, I promise you as we’re talking now, there are large volumes of investable money that South African companies are holding in cash, and not investing in the economy. And this has been the situation ever since ’94, driven by a fear that, ‘It’s inevitable that there will be a crisis. And because there will be a crisis, inevitably, I must hold as much of my assets in liquid form as possible, so that if I have to run, I can’t upend the factory because I can’t move it, but at least the money I can run away with.’ It’s a persistent problem.”
Problems like this are rarely explored in The New York Times DealBook, which prefers to personalize economic decisions. It’s easier to imply in this case that it was all Mandela’s doing rather than look at the forces in the shadows that influence decisions.
News Dissector Danny Schechter was commissioned to write “Madiba A to Z” by the producers of the new movie “Mandela: Long Walk to Freedom.” He has written and produced films on economic issues including “The Crime of Our Time” on Wall Street and financial crimes.
ben hanbury (CC BY 2.0)